annual report 2007-08

CHAPTER V
THE COTTON AND
MAN-MADE FIBRE AND
FILAMENT YARN INDUSTRY

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62
annual report 2007-08
CHAPTER V
THE COTTON AND MAN-MADE FIBRE AND
FILAMENT YARN INDUSTRY
RAW COTTON
C
otton is one of the principal crops
of the country and plays a vital
role in the Indian economy,
providing substantial employment
and making a significant contribution
to export earnings. The ratio of the
use of cotton to man-made fibre and
man-made continuous filament yarn is 60:
40 in the Indian textiles industry (based
on financial year 2005-06). It engages
around 6 millions farmers, while another
about 40-50 million people depend on
activities relating to cotton cultivation,
cotton trade and its processing for their
livelihood. It is the principal raw material
for the domestic textiles industry. As on
December 31, 2007, there were 1,744
cotton/man-made fibre textiles mills
(non-SSI). in the country with a capacity
of 34.87 million spindles, 4,57,000
rotors, and 56,000 looms. in addition
another 1,219 small scale spinning
units with 4.00 million spindles and
about 1,57,866 Rotors are in the small
scale decentralised sector. Cotton and
cotton related textiles items contribute
significantly towards exports earning of
the country.
PRODUCTION & CONSUMPTION
India was the 2nd largest producer (4.76
Million Metric Tons) of cotton in the world
during 2006-07, accounting for 18.45%
of global production. During 2006-07,
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India led the world in cultivated area
(9.16 Million hectares). In productivity
(521 kg.lint/ha), India was far behind
many countries (USA: 912 kg/ha, China:
1251 kg/ha and World Average: 756 kg/
ha). The major reason for low yield is that
65 % area under cotton is rainfed. The
country’s cotton output for the cotton
season of 2006-07(October-September)
was estimated at a record 280.00 lakh
bales (of 170 kgs each). Gujarat produced
101.00 lakh bales significantly higher than
the earlier level of 23.75 lakh bales, during
the cotton season of 2000-01(October-
September). For the first time in the cotton
season 2006-07(October-September),
cotton yield was about 521 kg/hectare,
recording an increase of 10.17% against
the cotton season of 2005-06(October-
September). With the further possibility
of increase in use of Bt seeds/ Hybrid
seeds, and a decline in the cost of such
seeds, it is estimated that by the terminal
year of XI Five Year Plan (2007-2012), the
yield per hectare will increase to 700 kgs.,
and cotton production will reach 390 lakh
bales.
The consumption of cotton has been
increasing over the last few years. The
total consumption has risen from 111.09
lakh bales in 1991-92 (mill and non-
mill), to 235 lakh bales in the cotton
season of 2006-07 (Oct-Sept), which is
the highest ever recorded. This increase
 ministry of textiles

in consumption is due to the additional
capacity created in the Cotton Textiles
Industry. The variety-wise demand for
cotton almost follows the same pattern
as the variety-wise production. The major
demand is for medium and medium long
staple variety, which also has the largest
share in the total production of cotton.
The demand for short staple varieties is
relatively very small. The Cotton Balance
Sheet, as drawn by the Cotton Advisory
Board (CAB), from 1999-2000 to 2006-07
(Oct.- Sept.) is at table 5.1
IMPORT
Imports of cotton into the country were
placed under Open General license on
April 19, 1994. Till 1998-99, there was no
import duty on cotton. With effect from
March 1, 1999, import duty to the tune
of 5% was levied on cotton imports with
an additional 10% surcharge. In order
to avoid import of cheaper cotton, mainly
on price consideration, the Government
of India had levied 10% import duty w.e.f
January 8, 2002.
The objective of placing import of cotton
under OGL was to maintain a balance in
the supply and demand of cotton, and
stabilize the price and easy availability of
cotton at competitive prices for the Indian
textiles Industry, thereby making them
competitive in the international market.
The import of cotton at zero rate of duty
is also permissible under the Advance
Licensing Scheme, against the export of
end product. Further, the 100 % Export
Oriented Textiles Units (EOUs) can also

Table 5.1
Data on Area, Production, Yield and Consumption of Cotton for the pe-
riod from cotton season 1991-92 to 2006-2007 {as per the Cotton Advisory
Board (CAB) estimates}
Cotton Year Area in Cotton Production Cotton Cotton Con-
Lakh prodn. in in 000’s yield in kg/ sumption in
Hectares lakh bales tonnes Hectare lakh bales of
of 170 kgs each mill +
each non-Mill + SSI
Units
1991-1992 76.01 119.00 2023.00 266.14 111.09
1992-1993 75.41 138.00 2346.00 311.00 125.01
1993-1994 74.40 121.50 2065.00 278.00 127.00
1994-1995 78.61 138.50 2354.50 300.00 135.00
1995-1996 90.63 170.70 2901.90 320.00 154.29
1996-1997 91.66 177.90 3004.30 330.00 170.16
1997-1998 88.29 158.00 2686.00 307.00 159.01
1998-1999 92.87 165.00 2805.00 302.00 165.36
1999-2000 87.31 156.00 2652.00 304.00 173.36
2000-2001 85.76 140.00 2380.00 277.52 173.03
2001-2002 87.30 158.00 2686.00 307.67 171.76
2002-2003 76.67 136.00 2312.00 301.55 168.83
2003-2004 76.30 179.00 3043.00 398.82 177.10
2004-2005 87.86 243.00 4131.00 470.11 195.03
2005-2006* 86.77 241.00 4097.00 472.17 219.00
2006-2007* 91.58 280.00 4760.00 519.76 235.00

* CAB estimated in its last meeting held on 09.08.2007

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annual report 2007-08

meet their requirement of inputs, which
also includes raw material, i.e., cotton
fibre at Zero percent duty. As such, textiles
mills are at liberty to import cotton of any
variety from any country to meet their
requirement.
will be in the range of 5-10 lakh bales (of
170 kgs. each) particularly of ELS cotton.
The data on the import of cotton during the
period from 1997-2006 is at table 5.2
EXPORTS

The IXth Five Year Plan (1997-2002)
witnessed a significant increase in cotton
import, simultaneous with a sharp decline
in export. Decline in production and non-
availability of good quality cotton in certain
staple classes (Long Staple Category of
27.5-32 mm length) at reasonable price
has contributed to this trend. However, the
situation was reversed during the Xth Five
Year Plan (2002-2007) and import has been
declining, simultaneously with a continuous
increase in export. Lower imports can be
attributed to higher domestic production at
280.00 lakh bales, and the price difference
which has closed substantially. Only need-
based imports of Extra Long Staple (ELS)
category (32.5 mm length and above) have
taken place during the cotton season of
2006-07 (Oct.Sept.). During the XIth Five
Year Plan (2007-12), import of raw cotton
The IXth Five Year Plan period witnessesd
a significant decrease in cotton export.
Due to the high domestic price, vis-à-vis,
low international prices and the superior
quality of cotton abroad, Indian cotton lost
its competitiveness in a sharply declining
international price scenario. Of late, cotton
quality has improved and due to good
production coupled with improved quality,
exports have picked up significantly in
2004-05 and 2005-06. The exports during
the cotton season of 2006-07 (Oct.-Sept.)
have been estimated at 58.00 lakh bales,
which is the highest ever recorded, and is
basically due to the increase in demand
from China, the better brand image of
Shankar-4 variety grown in the State
of Gujarat, and high domestic stocks.
Details of exports of cotton during
1997-2006 is at table 5.3

Table 5.2 Table 5.3

Cotton Year Import Quantity Cotton Year Export quantity
(Oct-Sept) (in lakh bales of 170 (Oct-Sept) (in lakh bales of
kg each)* 170 kg each) *
1997-1998 04.13 1997-1998 3.50
1998-1999 07.87 1998-1999 1.01
1999-2000 22.01 1999-2000 0.65
2000-2001 22.13 2000-2001 0.60
2001-2002 25.16 2001-2002 0.50
2002-2003 17.67 2002-2003 0.83
2003-2004 07.21 2003-2004 12.11
2004-2005 12.17 2004-2005 9.14
2005-2006 05.00 2005-2006 47.00
2006-2007 05.53 2006-2007 58.00
2007-08 (P)* 06.50 2007-2008 (Esti- 65.00
mated)*

* AS per CAB estimated in its last meeting * CAB estimated in its last meeting held on
held on 11.01.2008. (P) - Provisional 11.01.2008.

65

The future prospects for export look well,
as cotton quality has improved in the
last 3-4 years and Indian Cotton is more
export-worthy now.
In a bid to boost cotton trade, the
Government had already removed all the
restrictions on the export of cotton, vide
Notification No. 18(RE-2001)/1997-2002,
dated July 2, 2001, issued by the Director
General for Foreign Trade, Ministry of
Commerce & Industry, under which,
conditions relating to certification on
registration, allocation, quality and quantity
of export of raw cotton, by the Textiles
Commissioner has been dispensed with
w. e. f. July 2, 2001.
PRICES OF COTTON
(i) Kapas Price
For the cotton season of 2007-2008 (Oct –
Sept), the Minimum Support Price (MSP)
of Kapas (Seed cotton) for fair average
quality has been fixed at Rs.1800/- per
quintal for medium staple variety (F-414/
J-34/H-777). Similarly, the MSP for H-4
(Long staple variety) has been fixed at
Rs.2030/- per quintal, an increase of Rs.
40/- per quintal over the support price of
2006-07. The MSP for F-414/H-777/J-34
variety of kapas would be made applicable
only to Rajasthan. The price of said variety
i.e. F-414/H-777/J-34 is grown in Haryana
Table 5.4
Average Spot Rate (Rs./qtl.) During Oct. – Sept.
Variety
2005-2006
J-34 4470
LRA-5166 4623
H-4 4793
S-6 5130
DCH-32 11618
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ministry of textiles
and Punjab and its price has been fixed
keeping in view the respective quality
differential, vis-à-vis, Rajasthan, obtaining
in these States. Based on the MSP for
these two basic varieties and taking into
account of the fibre quality parameters and
other relevant factors, the support price
for other varieties of kapas of fair average
quality for the cotton season of 2007-08 is
fixed by the Textiles Commissioner.
During the Cotton Season of 2006-07
(Oct - Sept), the kapas prices were ruling
higher than the previous year (2005-
06) price level through out the cotton
season. Due to record production in the
country, as well as, in the world, the kapas
prices have been higher during the cotton
season of 2005-06 (Oct.-Sept.) and have
touched the MSP level in all states. The
Cotton Corporation of India Ltd. (CCI) had
undertaken MSP operation for the limited
period during the cotton season of 2006-07
and also procured kapas equivalent to the
lint cotton of 11.78 lakh bales (of 170 kgs.
each) under MSP operation till 30.9.2007.
(ii) Lint Price
The seasonable average prices in the case
of all varieties during 2006-07 remained
well above those in the previous season
(2005-06) as may be evident from the
table 5.4
2006-2007 % Change
4858 (+) 08.68
5129 (+) 10.94
5149 (+) 07.42
5373 (+) 04.74
9171 (-) 21.06
annual report 2007-08
COTTON ADVISORY BOARD
The Cotton Advisory Board (CAB)
is a representative body comprising
Government agencies, growers, industry &
trade. It advises the Government generally
on matters pertaining to production,
consumption and marketing of cotton,
and also provides a forum for liaison
among the cotton textiles mill industry,
the cotton growers, the cotton trade and
the Government. The Board originally
reconstituted on June 26, 2006, consisting
of 51 members, 7 Government of India
nominees, 11 State Government nominees,
7 representatives from cotton growers, 5
representatives from the textiles industry,
5 representatives from the cotton trade, 4
representatives from Ginning & Pressing
(G&P) sector, 6 representatives from Cotton
Research & Development Institutions, 1
representative from Powerlooms Sector, 2
representatives from seed Manufacturing,
1 representative from Handlooms Sector,
and 9 other nominated members. The
reconstituted Board is valid upto June
25, 2008.
INTERNATIONAL COTTON ADVISORY
COMMITTEE (ICAC)
The International Cotton Advisory
Committee is an association of Governments
having an interest in the production,
export, import and consumption of cotton.
It promotes cooperation to find solution
of cotton problems, particularly those
of international scope and significance.
The functions of the International Cotton
Advisory Committee are to:
l Observe and keep in close touch with
developments affecting the world
cotton situation.
l Collect and disseminate complete,
authentic, and timely statistics on world
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cotton production, trade, consumption,
stocks and prices.
l Suggest, as and when advisable, to
the governments represented, any
measure the Advisory Committee
considers suitable and practicable
for the furtherance of international
collaboration directed towards
developing and maintaining a sound
world cotton economy.
l Be the forum of international
discussions on matters related to
cotton prices.
The 66th Plenary meeting of the International
Cotton Advisory Committee (ICAC) was
held at Izmir, Turkey from October 22 – 26,
2007. Representatives from 53 Countries
participated in the meeting. The theme of
the meeting was “Strategies for National
Competitiveness”. The session and
workshop planned were on several major
topics. The Indian delegation was led by
Shri Sutanu Behuria, Additional Secretary
and Financial Adviser, Government of
India, Ministry of Textiles, New Delhi.
The 65th Plenary Session of ICAC was
held in Goiania, Brazil from September 11-
15, 2006. For the fiscal year 2006 (July,
2006-June, 2007), India’s contribution to
ICAC was US $ 58,300.00 (approximately
Rs. 23.64 lakh).
TECHNOLOGY MISSION ON COTTON
The Technology Mission on Cotton (TMC)
was launched by the Government of India
on February 21, 2000, with the objectives
to address issues of raising productivity,
improvement of quality and reduction in
the cost of production of cotton and thus
providing the much-needed competitive
advantage to the textiles industry along with
ensuring attractive returns to the farmers.

The Mission consist of four Mini-
Missions (MM), which are jointly
being implemented by the Ministry of
Agriculture and the Ministry of Textiles.
The Research & Development of Cotton
and Dissemination of technology to
farmers are being undertaken by the
Ministry of Agriculture through Mini-
Missions I and II, respectively. Ministry
of Textiles is the Nodal Agency for Mini-
Missions III & IV of TMC. Mini Mission
III relates to improvement in marketing
infrastructure and includes the revival of
dormant market yards, improvement in
existing market yards and setting up of
new market yards.
Progress
The initial target for MM-III was to
develop 111 market yards (51 in the IXth
Five Year Plan and 60 in the Xth Five Year
Plan). This was increased to 250 in June,
2005. As on January, 2008, development
of 246 market yards has been sanctioned
and 125 market yards were completed at
an estimated project cost of Rs. 485.14
crores of which Government of India (GOI)
share is Rs.249.65 crores.
The initial target of MM- IV was to
modernize 500 Ginning & Pressing (G&P)
factories (150 in IXth Five Year Plan and
350 in Xth Five Year Plan). It was increased
to 1,000 G & P factories in June 2005. As
on January 2008, against the total target,
948 projects have already been approved
and modernization of 664 G&P Units were
completed at an estimated project cost of
Rs.1351.84 crores of which GOI share is
Rs. 215.83 crores.
The Scheme completed its tenure on March
31, 2007. However, in terms of target and
completion of the projects, the MM-III and
MM-IV of TMC has been extended for two
years i.e. upto March 31, 2009.
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ministry of textiles
MAN-MADE FIBRE AND FILAMENT
YARN INDUSTRY
The industry comprises fibre and
filament yarn manufacturing units of
cellulosic and non-cellulosic origin.
The cellulosic fibre/yarn industry is
under the administrative control of
the Ministry of Textiles, while the non-
cellulosic industry is under the control
of Ministry of Chemicals and Fertilizers
(Department of Chemicals and Petro-
Chemicals).
The production of man-made fibre
during 2007-08 shows an increasing
trend as compared to the corresponding
period of 2006-07. The total man made
fibre production increased by 9.5%, a
compare to the corresponding period of
the previous year. The total man-made
fibre production is expected to increase
by about 10% during 2006-07, as
compared to 2005-06. The production
of Viscose Staple Fibre & Acrylic Staple
Fibre is expected to decrease by 10%
and 3%, respectively, during 2007-08.
The production of Polypropylene Staple
Fibre and Polyester Staple Fibre is
expected to increase by 11% and 10%.
The total production of man-made
filament yarn increased by 9.5%, during
April-December 2007, as compared to
corresponding period of the previous
year. The production of Nylon Filament
Yarn and Viscose Filament Yarn is also
expected to increase during 2007-
08. The production of Polypropylene
Filament Yarn and Polyester Filament
Yarn is expected to increase by about
10% during 2007-08.
The installed capacity and details of
production of man-made fibre and
filament yarn are given Table 5.5
annual report 2007-08

Table 5.5
INSTALLED CAPACITY AND PRODUCTION OF MAN-MADE STAPLE
FIBRE / FILAMENT YARN

Type No. of Installed 2005-06 Production (Mn. Kg.)

Units Capacity 2006-07 2007-08 2008-09
(tpa) (as on (E) (P) (P)
31.03.07)
STAPLE FIBRE
Viscose 3 328.8 229 230 242 254
Polyester 17 1294.6 628 754 829 912
PP 4 9.7 3 1 2 2
Acrylic 7 162.9 108 131 144 159
TOTAL 31 1796 968 1117 1217 1327
FILAMENT
Nylon 7 654.4 37 38 40 42
Polyester 43 2164.14 1076 1225 1348 1482
PP 17 116.2 14 15 16 17
Viscose 7 80.1 53 53 54 55
TOTAL 74 3014.84 1179 1331 1458 1596
E - Estimated
P - Provisional

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